“We deliver roughly 150,000 orders a day – this comes to about 4.5-5 million orders a month. An average order for home chefs is Rs300-350 whereas for other restaurants it is about Rs550,” says Mr Aemad Mehdi, director of operations at Foodpanda. With about 90 per cent of the market, we are working with close to 20,000 vendors of which about 4,000 are home chefs, he adds.
Back-of-the-envelope calculations suggest that the daily spend on food orders from the platform is in the ballpark of Rs76.5 million a day, making it a monthly spend of Rs2.3 billion.
“The food delivery business is about 15-20pc of the total business,” says Athar Chawla, convenor of the All Pakistan Restaurant Association (Apra). Working backwards, a guesstimate of the size of the restaurant sector is about Rs134bn annually.
The Sindh Revenue Board’s target for the current fiscal year is Rs135bn. To put it in context, those who enjoy the luxury of restaurants roughly spend the same amount generated through all provincial tax activities.
Yet Mr Mehdi contends that the sector has barely scratched the surface. “Even if we include the dhabbas on GT Road, there are no more than 75,000 restaurants in Pakistan. Now compare this to, say, Bangkok that has 70,000 restaurants on the Foodpanda platform alone.”
The food delivery segment is growing in the high triple digits
However, the sector is growing in the high triple digits. “In July 2019, we crossed a million orders for the first time. Since then we have grown by about 4.5 times; we doubled during the lockdown period. Therefore, the compound growth rate is fairly high which, given that Foodpanda is the biggest player, is indicative of the growth rates of the industry as a whole,” he explains.
“This is why Pakistan is one of the largest markets in terms of country population and growth rate that Delivery Hero operates in. We are definitely in its top 10 destinations,” says Mr Mehdi. Delivery Hero SE is a European multinational online food-delivery service based in Berlin, Germany. The company operates in 40-plus countries.
Pandamart — the next frontier
Launched three months back and currently operating only in Karachi, Pandamart is practically in its infancy. This month, it will roll out in Islamabad in six locations and then Lahore post-Ramazan. “About 15pc of all orders from Karachi are from Pandamart,” said Mr Mehdi, calling the results ‘phenomenal’ and expecting it to match the food delivery business in a year.
Boasting a 20-minute delivery time, Pandamart is based on quick commerce — the idea is that the riders will deliver in the amount of time it takes a customer to drive to the nearest kiryana store.
Pandamarts are 12 physical dark stores across Karachi and Hyderabad that act as warehouses for the delivery business and not for customer walk-ins. With a 4-5km delivery radius, there are two different warehouses servicing the Defence area.
Even though Foodpanda’s grocery delivery business has been around only for a few weeks, Mr Mehdi estimates that the number of weekend orders rivals that of, for example, all of Imtiaz stores at around 20,000 with an average order size of Rs500-700.
However, a glance through the Pandamart would disappoint Clifton tea drinkers as sugar and Nestle Milkpack are both missing from the list and thus require the emergency morning trip to the nearest store.
The rider force
“We have a flexible workforce of about 20,000-25,000 riders who choose their own hours and shifts. A rider working five to six days a week for eight hours on average makes Rs45,000 a month, which is phenomenal given that the minimum wage is Rs18,000. During peak seasons such as Eid or Pakistan Super League, we offer higher incentives to ramp up the rider force,” says Mr Mehdi
A rider is paid per order, which includes a base amount, an amount for the distance he has to travel and a potential bonus based on the number of orders he completes.
However, not all riders agree with this view. One says he has to work two five-hour shifts to make Rs35,000-40,000. Per delivery, he is paid Rs25-40 though it goes up to Rs70-80 for long distances. Another scoffs at Rs45,000, saying he makes only Rs25,000 — not accounting for all the other expenses since the riders have to use their own mobiles, internet and motorbikes. “The tips I get from customers barely cover my fuel costs,” laments one while saying that he is a graduate but that there are just no other jobs available.
Scratching the surface
Many may remember the rather public tiff between Apra and Foodpanda a few months back. Since then, the battle fizzled out. “Let’s assume that there are about 80,000-85,000 orders in Karachi. Careem has about 4,000 of these, the rest is Foodpanda,” says Mr Chawla.
Currently, the restaurant business is about 50-55pc of what it was pre-Covid times, Mr Chawla explains. Therefore, most restaurants are focusing on survival and Foodpanda is the undisputed market leader.
“While we are operating in the Covid environment, Careem will prioritise their rides business,” said Mr Mehdi, speaking of the competition. However, he added that more players would be overall better for the industry as that would empower restaurants.
Nor does Foodpanda seem fazed about competition further down the road. “Even with our volume of orders, we have only scratched the surface,” he said, indicating the billions to be had in this business.
Published in Dawn, The Business and Finance Weekly, April 5th, 2021